Health Care

What Is FRDI Bill? Lowdown On The Deposit Insurance Legislation

What Is FRDI Bill? Lowdown On The Deposit Insurance Legislation”

Today, the finance ministry has clarified the provisions of deposit protection guarantee that will maintain in the proposed FRDI bill as well. It said, Government's implicit guarantee for Public Sector Banks remains unaffected.

Bankers point out that the draft bill states that "the Resolution Corporation shall, in consultation with the appropriate regulator, specify the total amount payable with respect to any one depositor, as to his deposit insured under this act, in the same capacity and in the same right".

"The FRDI Bill is far more depositor friendly than many other jurisdictions, which provide for statutory bail-in, where consent of creditors or depositors is not required for bail-in", it said. He assured that contrary to claims by Opposition parties, the government was committed to protect the rights of depositors. "The objective of the government is to fully protect the interest of the financial institutions and depositors", he said in a tweet. At present, all possible actions have been taken to prevent he failure of banks and protection of interests of depositors. The petition was started by a Mumbai-based individual, Shilpa Shree, with a single signature and has got over 40,000 signups within 24 hours, supporting her appeal to Finance Minister Arun Jaitley to not let this bill pass with the "bail-in' provision". It was set under the chairmanship of Ajay Tyagi additional secretary, Department of Economic Affairs, Ministry of Finance.

The Bill also seeks to deal with insolvency of financial service providers.

The bill was open for comments and views till October 31, 2016.

The FRDI bill, introduced in the Lok Sabha on August 11, 2017, is under consideration of the joint committee of Parliament. Mamta Pathania, co-project director at National Consumer Helpline and faculty member at the Indian Institute of Public Administration, said in a report in Mint that "the provisions of the bill have been creating a lot of confusion in the minds of the people".

The bill is scheduled to be debated in the winter session of Parliament.

The FRDI Bill had suggested that the use of "bail-in" provision may result in the cancellation of a liability, which could extend to bank deposits, sources in the banking industry said, referring this as the source of anxiety for depositors. There is no dilution thereof.

The government, in its statement, reiterated its commitment to support banks.



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